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tv   Power Lunch  CNBC  October 24, 2017 1:00pm-3:00pm EDT

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>> maybe we'll reconvene and have a conversation about what's happening with adp lee cooperman, with us give me a quick name in. >> chubb >> emerson >> power starts now. >> dow 24,000, here we come, and earning s palooza. the feud between trump and corker taking another nasty turn today. the president calling corker incompetent, koocorker calling trump completely untruthful. and a muddy offroad sign the consumer is feeling pretty good about life right now the ceo of this mystery high
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flyer will join us power lunch starts right now welcome to power lunch earnings feeling a big earning today. the dow up triple digits, fueling it caterpillar and 3m, adding 100 points to the dow just by themselves 3m higher by 8%. h&r plunging 20% the office maker beat thing at earnings estimates it's coming in well short of expectations whirlpool shares are tanking on news that sears will stop selling the brand. stanley black & decker rallying. the toolmaker also raising its full year outlook. tyler? >> thank you president trump meeting with republican senators right now pushing his tax reform money, which he says will generate $12
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trillion in economic activity. this after getting into another war of words with bob corker >> the president has already arrives at the capital for the senate republican lunch he's attending, take a look at the video of the arrival of the president. he walks inside alongside mitch mcconnell. that's called the ohio clock position, just off the senate floor, a normal walk in, but an unusual incident happened a few moments ago. somebody throws something in the general direction of the president, and screams something along the lines of trump is treason or something like that, that protester has been detained and removed from the capital complex. the secret service will want to get a little more information on that moment. this is all in the context of a day in which the 3rez has been involved in a war of words with bob corker
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corker earlier today said the president has been dividing the nation >> our stock market just hit another record high, it's the highest its ever been in history by far, we've created about $5.4 trillion only in stock market value. $5.4 trillion. and we're very happy about it. >> sorry, that was obviously the president talking about the stock market today, something the president likes to do on days like today when there's a big move in the market corker did talk about the president, here's that >> many people, i was one of those that hoped he would rise to the occasion. and aspire to lead our nation, instead of dividing it, it's obviously his political model and governing model is to divide
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he has not risen to the occasion. >> of the presidency it 168. the president firing back in a series of 2w50e9s throughout the morning. five tweets over the course of three hours this morning, isn't it sad that lightweight senator bob corker who couldn't get re-elected in tennessee will fight tax cuts plus. the president there raising the prospect that corker would be against the tax cut bill when it ultimately hits the senate floor. not clear that's the case, i talked to white house officials here who say, they believe that ultimately despite this feud, between corker and the president, corker could end up voting for tax cuts, it's something he's campaigned on and is in his interest as a republican, guys over to you. >> a few days ago, we all celebrated dow 23,000, now we're nearly halfway to dow 24,000 up more than 200 points.
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as we get bigger, these big numbers get a little easier, it's still kind of exciting. >> it is i wish it was a broader market rather than what we've seeing, look at what's going on here the dow is diverging from everything else on the planet. that's a 70 basis point divergence, that's a lot for the dow versus the s&p 500 because companies have been raising guidance and the markets are loving it right now. particularly 3m, which has twice normal volume here put these two numbers together, these two companies, they're 165 points in the dow. two companies, united tech also raised their guidance. we have a rally on two stocks, breadth is what i don't like here new highs, 200, that's fair, not expanding. let's just say the reason things are holding up well is the guidance we have here. caterpillar raised 25% that's eye popping
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you don't see that very often. the rest are more typical. they all raised about 1%, that's good nor a little move up, but in the cases of 3m, the move was much greater here. why does this keep happening the reflation trade, that's what these companies are involved in. they get their money outside the united states, 3m makes 60% of its revenues caterpill caterpillar, about 93% beware of chasing stocks on earnings remember ibm it's been floating down for the last couple days, guys, back to you. >> let's talk about caterpillar and 3m, which are responsible for today's moves in the dow, morgue ing brennen has been digging deeper into what's driving those stocks >> morgan?
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beats and raises that's what's the driving force today caterpillar getting the most attention after a huge earning earnings beat. 3m is having its best trading day in eight years, up more than 7% right now even united technologies which is falling on weaker than expected margins, that's the second time that's company's done that this year here is what is driving the sector. industrial production has picked up, commodity prices have picked up global growth picked up sales have begun growing, and we're seeing this across different businesses for these companies, factoring smarter manufacturing investments, new products, companies like cat and 3m are beginning to reap the rewards, more than a dozen industrials are hitting all time highs today, including cat 3m.
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also, rockwell collins and honey well, the exceptions, lockheed martin, even though the defense contractor also raised guidance and general electric, which is after dismal results last week, increasingly appearing to be the outlier in that sector the stock hitting a fresh multiyear low today. the dow up 19% >> not so long ago that cat was a dog. >> absolutely. >> don't forget that when you look at ge today i'm not saying i'm not predicting anything, but these forces can turning around. and a turn in the economy. >> absolutely, and the industrials are cyclical for a reason, right? >> yep, morgan, thanks >> another cyclical company, general motors reporting strong earnings >> much better than expected earnings from general motors, it beat the street by 20%, the focus is the fact that it earned 1:32 a share the focus is the future when it
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comes to technology, ride share platforms, what does gm see there, this is their cruise automation, one of the test vehicles out in san francisco. on the conference call today, the company says it's making progress when it comes to self-driving cars. ceo mary barra says they're keeping their options open in terms of what happens next >> we very much believe we want to maintain the relationship with the customer, so we're exploring many options, and we could partner with someone, partner with many, or work on our own. >> as you take a look at shares of general motors, mary barra also mentioned they're evalua evaluating acquisition opportunities. compare the optimism with general motors there's plenty of optimism there for shares of seau, but during
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the company's conference call was asked point blank about all of the optimism for the automakers when it comes to self-driving cars, he said it succinctly, don't believe the fluff, it's going to take a long time and a lot of investment, before the tech companies know how this will play out that's something to keep in mind as the auto stocks pay off when it comes to self-driving cars >> thanks very much. we have breaking news out of washington, with regard to tax reform >> house republicans have set a date for the release of their tax bill, it will be november 1st, according to a source on political, researches had said they would not release their tax plan until a budget is passed. the house is scheduled to vote on that budget on thursday they're assuming this is going to sail right through without any opposition from the
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conservative wing of the republican party earlier this morning, paul ryan said he was grateful for the president's leadership on this issue. even as president trump arrives here on capitol hill for a lunch with republican senators that is expected to be very contentious, a date for that tax bill, november 1st, back to you. >> another news alert, julia borstyn standing by for that >> mike hopkins is stepping down, he's becoming the head of sony pictures entertainment. you have hulu ceo going over to sony television. randy fleer had been on the hulu board of directors he's been president and ceo of fox networks group since 2013.
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they're making their own shows such as the mindy project. >> julia, thank you very much, even as the market roars to record levels, black rock's chairman warns investors not to get used to this year's returns. >> black hawk investor institute cake out with a 10-year forecast of 4% that was with a pooled portfolio, that's how low it is. i think it's going to be closer to 6%. it's not going to be what we saw 8 or 10% ago >> is larry fink right ron. does larry's forecast sound right to you, or too low
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>> well, if you're just in the u.s. and you're thinking a balanced portfolio which in my world, that's 60/40, i think that could be so, i think it's more because of the bonds than the stocks i just saw leon just in the hallway here, and he stole some of my thunder where bonds are the bubble, and i've been saying that with you for a while. bonds are the problem, not stocks, and global growth -- we're bullish on the world, our major thing for years and years is that we don't hear about caterpillar takings share from deer they're both adding to sales because of the global growth, as long as the world keeps growing, these companies including boeing and apple have more clients and customers who are bullish on that a rising interest rate, especially in some kind of pool
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bond account, we've seen the best of those days opinion. >> is ron right? address the overall issue, whether you think a 4% return is a reasonable expectation over the next half decade, and is ron right, and has he nailed the point here, which is the sandbag is bonds not stocks? >> no, i guess he's right about bonds, but i think he may be -- the equity story, we have to hold things in context you look back at the last 10 years, which included the great recession. stocks have delivered a 7 1/2% in the s&p 500 what's been the anchor is fixed income has helped you we had a higher interest rate it's very hard to get to 10 or 12% with 40% of your portfolio has a 2.5% return.
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the total return could be less than the yield if interest rates go up. >> of course let's assume you have the underlying bond for the full ten years. on the equity side, you have two things that are going to drive the future, which is it a current starting point valuations around the growth underlying going do support it now, at the valuations we're at, by every measure we're at the top 20% of valuations, it's hard for growth to keep up. there's nothing wrong with the average investor anticipating a 4% if we do better, great, they should look at the portfolios and equities, i completely agree the growth comes from global investing, you can do that with
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the s&p 500, most of the companies have operations offshore that you should be assessing your own risk and making sure you can with stand set back as long the way >> ron, you get -- >> that's unlikely to be the case for the next ten years. >> if you remember, tyler, we talked about thinking that alibabba was amazon on steroids, they make a deal with marriott, because in the next 10 years, the biggest travelers in the world will be the chinese. american companies will do well, the world's growing. the middle class is growing, it's a bullish world and you have to pick your sectors, you can't just be benign and do indexes, you have to be astute, we think that stocks still have a way to go. >> thanks very much, gentlemen president trump and bob
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headlines breaking moments ago. a tax bill will be revealed november 1st
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president trump and corker are doing a power lunch with senators the latest feud between trump and corker breaking out on twitter again this morning opinion is this going to crush any reform >> he needs every vote he can get on tax reform, bob corker is not running for re-election. when you're not running for re-election as a member of congress, your calculus can change dramatically. is it possible he pisses off corker so much, he loses this vote i think to mccain not voting for health care reform i wonder if trump being mean to mccain is part of health care reform >> it's possible i doubt it i seriously doubt it, corker doesn't like trump, trump doesn't like corker. i'm tempted to say, what's the phrase it's sound and fury, but much
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ado about nothing? >> signifying nothing. that was shakespeare i hope i get that right. i don't think it's going to matter to the vote, i doubt it very much, they're letting off steam, i don't know why it continues, i don't get it, i don't know >> remember john mccain was asked the same thing, though >> basically, do you hate the president enough that you would do something you would normally do just to spite him i think his answer to that reporter was, that's a dumb question you think he goes with his zb op head and not his anti-trump fight? >> i think the gop is right. >> john mccain split, right? >> he was against the health care, which surprised a lot of people he did voight for the senate budget resolution. at the end of the die -- >> the really important question for me is bob corker going to take a knee when they serve the advertisers today?
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>>. >> one of the clips asked him if he was going to the trump today. corker said, it's my lunch >> is that right >> have you seen this rally in the industrials today? >> yes, a large portion of this is because of donald trump, what do you think is driving this rally? is it earnings the numbers are good >> profits -- i think that's the biggest case you go through cycles. we're going through a cycle now that makes the trump tax cuts very doable. i think that's great, however. i would have a caution here, there's some issues, i'm hearing stuff from the house leadership, i don't like, i'm hearing, they may not use a 3% growth baseline, which is worth several trillion, they will use a joint tax committee baseline, which means no dynamic scoring will cost them a fortune. >> they can't have that.
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they're going to have the jct, they can't do that, that takes out the dynamic scoring. it throws a hand grenade to the room and runs off. >> it's one of the things. kevin brady mentioned it last week, i don't know how insistent or what, but as a process issue, you're exactly right, it blows a whole in the entire story. and we really don't yet know about the cbo. are they going to be beholden to the cbo scoring, which is going to blow another hole or not? the only way they can get this done, i first have to admit is a 3% growth path, which is worth 2 1/2 to $3 trillion in revenue. that's the mother of all paid fors without that, they cannot do, and they really need to collar phi that. >> they can't do it and stick to the 1.5 trillion in the budget resolution >> yes, someone was calculating
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if they go with cbo, the corporate tax may be 28% or higher, that's not acceptable. >> let's talk state and local taxes, i want to understand clearly whether you expect the bill that comes out on november 1st to exclude the ability of individuals to write off, not just their state and local income tax, but their local property tax as well that would inflame a lot of people. >> for sure. >> they'll go crazy. >> and the realtors will go crazy. >> property tax, i'm in a high property tax state, we've already -- >> the 5.3 trillion in stock market returns the president was talking about, that will be lost in the capitol -- >> i don't like any of this. >> in the house -- >> i don't like any this, all i want to do is business taxes and growing the economy at 3%.
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this is not really a tax reform bill like in 1986 if they go down that path they will fend off the property taxes, can i raise one point? >> sure. this story in the journal mike pence interviews a potential fed chairman, that elevates the story. pence is trump's closest adviser, and pence is seeing warsh, jay powell. i guess he didn't see yellin, of course, the president did. i'm just saying, that his name seemed to be lagging, i would put back back into the first tier it's going to come out of mr. trump's head 12k3w4r thank you, larry >> larry kudlow. >> shares of whirlpool are
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leaving investors feeling a little sunk today they're down over 10%, we'll tell you why after a number of tough years for brick & mortar retailing, are we finally, actually, sort of kind of near the bottom for retail, ithe reaiinors ermo pn store? we'll find out power lunch returns right after this looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.
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today's power rundown focuses on retail. there are three big topics to
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hit with courtney reagan, who's live at the ceo summit, a bunch of big names from fashion and retail are there a big interview, you caught up with the chairman of saks and hudson's bay >> yeah, that's right, a lot of talk at this conference is about department stores and the future of them. a lot of the folks that are here, are involved in them in some way, maybe the brands sell on the department store stores or websites, we caught up with the chairman, he was a last minute edition here after the news today after the sale of the lord & taylor flag ship for $850 million. take a listen. >> drives in tremendous amount of cash, and allows us to pay down $1.6 billion in debt, and leave us with approximately $385 million in cash. this sets us up to be really strong financially going-forward as we execute what's really a difficult retail environment
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>> he wouldn't say if it makes him more nimble and able to take the company private, there have been reports that that's what he's interested in a lot of talk here today about the future of department stores. >> next topic, could this be the year that online shopping during the holidays passes in store sales? >>. >> yes, this one is really interesting. a new survey out today from deloitte more than half for the first time say they'll spend more money online this holiday season than they will in stores, i think the breakdown was 51% to 42%. last year it was evenly split. higher income earners say they'll spend more that's interesting you and i talk about this a lot somewhere between 85 to 90% of all items are still bought at a physical store pete nordstrom spoke earlier to the crowd. his number is a little higher than most retailers.
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26% of what nordstrom sells online they may one day get to 50%. that is more in line than what that survey shows. >> tough day for investors, down 10%. they announced they're pulling out of sears a price fight causing the breakup. who's breaking up with kwhoem? >> this is an interesting one. whirlpool said in may they informed sears they were no longer going to be a vendor. we're note going to sell you our maytag, kitchen aid gen-aire appliances sears said if they want to charge higher prices, we need to be able to charge low prices to stay competitive if you're in the the market for whirlpool, you're not going to be able to get it at sears much longer
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this is much more checkmark in that worrisome column for the retailer >> courtney, thank you very much enjoy the conference coming up much more on this record breaking rally at this hour we'll ask if any democrats will get on board with tax reform is the republican plan going to cause a 1 pngt $5 trillion problem for the economy, we'll be right back. with advanced safety.
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here's your cnbc news update
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for this hour. paul ryan is calling on representatives to pass a tax cut bill by thanksgiving he called a news conference to publicly push them to work on it the interior department is announcing plans for what's expected to be the largist oil and gas lease sale ever held in the united states. it involves 77 million acres in the gulf of mexico that would be open for drilling. russia vetoed a resolution to suspend u.s. inspectors the united states was accused of calling the vote to show up and dishonor russia. the dodgers and houston astros said to face off in the hottest world series game ever we don't mean that's hot oh, my gosh, it's so hot game one begins at 5:09 p.m.
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pacific time, temperatures between 95 and 97 degrees, that beats what happened in arizona at 94 degrees, that was the record hot until then. >> must be those santa ana winds. >> joining us is representative josh gottheimer. congressman, welcome, good to have you with us >> i red in something you wrote, there's a lot to like about the ideas that have been floated so far about tax reform >> i think we have to get our tax rates down overall you can't have it higher than the major countries around the world, i'm for that, and obviously i want to get rates down across the board, my
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concern is, of course, provisions like the state and local taxes eliminating that, which will be a huge problem for states like mine, i'm from new jersey, that would end up being a tax hike, that's what i'm worried about. >> i'm a new jersey resident as are several of the people that work here. >> do you think the state and local tax, the elimination of the ability to deduct is going to be in the final bill? does it apply only to income taxes. do you understand it applies as well to property taxes they're trying to eliminate it for income and property. there's a lot of negotiating going on, which is why i'm eager to see the details and get into it to see the impact on new jersey and what it would mean for our tax rate bottom line, we're working very hard to make sure that new jersey and other states like ours doesn't actually carry the full burden of tax reform on our backs
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>> you get why someone who lives in a low tax state thinks they sub sid dies your constituents, right? it ends up being their tax bill, while your people who live in your state are paying for the state government >> right, which is why i quickly jumped to the facts which are -- in new jersey where i live, we get back 33 cents on the dollar we send to washington. states like west virginia get back $4.23 on the dollar we're paying the bill for others, tauz actually -- it's jersey well fare payments going to other states. to actually add to that now is another 6%, or $3,000 per family is offensive and will be uncompetitive for jersey the reason this comes up they have to figure out how to pay for these things, right?
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what would you do? >> this is why i want to see the pay fors the lobbyists are going to go after every single provision, we have to see the details. >> what pay for would you vote for? >> there are a ton of shelters you could eliminate as you know, when you lower the corporate tax ra rates that are out there we're ready, i just don't think it comes down on the backs of states like ours and eliminating the state tax due degeneration is air killer for a state like ours. >> let's talk a little bit about business taxes and what could be a part of this legislation and that is limiting the taxation, reducing taxation of pass through income for small businesses where do you stand on that >> i think this quickly gets into an issue where you have to make sure what you do doesn't
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just favor bigger companies, but gives relief to pass throughs which are incredibly important to the life lining of our country. this is where -- we've been talking around and around for months now, at a high level, we need to get into the specifics and that's where it requires -- i'm a fiscally more conservative, i want to sit at the table and get into the details, we've been asking for this for months. and, you know, we have a bunch of democrats like me who would be willing to support the right tax reform, we have to be in the conversation, and see the details, this is where it's important to see how it's going to have an impact. >> i guess we'll see the details on november 1, that's what they're saying, or we're reporting that will be the day the gop will release the details of the tax bills. >> i'm ready and eager >> i hear you have to go vote. >> eager to do that too. president trump meeting gop senators right now to talk taess
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there's very little talk about cutting spending that could create a problem. >> let's look at the overall budget picture before we get to tax reform, the cbo says the deficit this year is going to be about $487 billion by 2027 it's going to be 1.4 trillion, cumulatively, 9.4 trillion in deficits over the next 10 years, one of the biggest reasons is, look at the roles of social security, 45 million people on them now, by 2027 that will be 60 million, an increase of a third by 2023. 77 million people will be on the roles, that means the federal government needs more money to pay for that, take a look at the senate budget resolution, it allows for $1.5 trillion in higher deficits. that won't actually add to the
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deficit, because they're going to generate so much growth it will offset that money but that is highly spective. and the increase in retirement benefits for baby boomers, that is a demographic certainty and that's what people have to weigh, it's the concern of bob corker who's had this titanic fight with president trump today, he says he won't vote for a tax bill that will add a dollar to the deficit. we will see whether that concern ends up getting bigger especially as you indicated in that interview as all the pay fors, get jettison from this bill those are all being trimmed down, the cost is getting higher >> john, thank you very much >> let's get a check on the markets as this really incredible rally continues, the dow is up by more than 200 points right now what's even more amazing about
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this, ibm, johnson and johnson are down 3m, caterpillar and boeing are really fueling the dow right now in a big way, if ibm wasn't down, the dow would probably be up about 300 points. financials as a group, the best performing sector, bank of america is at its highest level since 2008, put this in your market pipe and smoke it there are 11 dow stocks which are up more than 25% just this year >> that's an incredible move >> a good return >> not bad at all. >> very negative about that. >> how much more pain is ahead for ge investor shares hitting another new low or to dig into ge's biggest problems right now, shares of polaris soaring right now, we're going to ask if people are really buying more
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atv's and motorcycles, just iccause the stock market is hot. stk around and find out the answer a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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welcome back to power lunch. a bullish outlook, 10 year high as quarterly profits edged past expectations ryan marshall says demand remains robust in areas like houston and floors, which were hit particularly hard, guys. >> thank you very much >> record sales, improved profits, data pushing shares of polaris hired today. here for a power lunch exclusive is the ceo -- the market is rewarding you as it has been all year here's our question, you are a consumer company, albeit mostly discretionary. we want your stuff, but we don't need your stuff.
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how much have you been able to figure out that these record stock market highs are causing people to go out and buy atv's >> you know, obviously, we're helped by the market, you think about our customers, their 401(k) balances go up, they're likely to have more confidence and buy a new side by side or motorcycle i think the regulatory reform we're seeing is starting to get confidence in our industries our customers are feeling more confident. traffic was up in the third quarter. >> we haven't talked about the farm economy we've been talking about the stock market mostly. you are dependent on the farm economy to a point how is that part of the economy doing? >> you look at ag and oil, which we lump together sometimes it's not those industries, per say, it's the consumers that are sported by those industries, together they make up about 23% of our overall sales
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the ag market was up quite significantly in the third quarter for us, and oil was also up, the first time in 18 months, we've had both of those markets respond well for us, so that certainly helped us deliver on our 13% retail sales growth in north america in the third quarter. >> the numbers were impressive the sales up dramatically. one of the first things you said this morning was, this was not a good quarter, just a better one, what does that mean? why not? >> well, you know, we have high expectations, we know internally, how hard the team is working and how many obstacles they're overcoming to make sure we deliver our commitments on the street really what i'm trying to do is make sure that everyone understands the earnings power of this company is significant in the future, and we have a lot of work to do to be as good as we believe we can be >> how important would tax reform be for your bottom line
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>> it would be significant for us we pay 35% we had some benefit in the third quarter, that gave us about 12 skrengts of earnings benefit. we are lobbying hard for tax reform, we believe we believe it will benefit our customers as well. >> that's the thing, scott, knock on tax reform, farmers screw the entire industry. they got a break 15 or 20 years ago instead of doing things like plants, they paid dividends. how do we know tax reforms will go into employees' pockets and opening factories. you would biuild more so you can hire more and pay more >> you can bet here a little bit. when we saw the opportunity to sell more vehicles, we built a plant in huntsville, alabama and hired almost a thousand people there. that's what gets the economy
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moving if tax reforms happened and people having confidence in future sales, they'll make investments here in the united states and giving people jobs and buying more products scott wine, we'll leave it there. thanks, scott. we'll see you soon >> take care >> thanks, brian >> hone analyst's take is coming up speaking of hasbro we'll ask about the new concerns of the new iphone is an over blown. power lunch will be right back
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all right, time for street talk these are the keys the wall street calls today >> first up is hasbro. analysts boosting its rating to over weight. however, dropping its estimates on what the company says in its
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early announcement yesterday barclays ups to over weight. >> all right, second stock is two connected stocks and one mccoy upgrade to -- delek us focused on the base of texas they own 82% of alon's refinery. it is all connected. >> the third stock is cheesecake factory, wells fargo dropping its price target of 43 to 46 you can see the stock is screening at 43 right now. > the fast fall restaurant
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they expect mall traffic head winds and inflation pressure to continue next year >> apple bees and brinker's and chili's, they have been struggling your final stock is party city boy, did i have a miss c conception when i walked into this stocks are down the past several months >> things may not be that bad. they got a party in the upside, $16 target that's about 30%, well, 25% seeing of today's gain >> paper plates, glitter and napkins. not at all what i expected >> no. >> general electric stocks are now $22. is it time for ge to be ejected from the dow the value of crypto currency
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the founder of the theory joining us to tell us why those doubters are wrong we are waiting for gop ncontors coming out with their luhe with president trump. tax reform on the menu, we are all over it. stay with us your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown
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could it be bow-wow and out and could it be the outsed be the best thing that ever happened to the company. some investors have been kicked out. >> shiny, healthy and many reports of the new iphone. >> bit coin is not just competing with conventional assets like dollars but also with other crypto. it is "power lunch," starts now.
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♪ we are simply running out of records for the stock market market run it is another day that ends in y. therefore, it is another market high i didn't mean to rhyme caterpillar and pboeing is all hire gm and, cannot be all good news. whirlpool is sinking and sinking a 100 years relationship with sears. bob pisani is standing by. >> hello michelle. i want to point of this dow and the s&p 500, 16 and 70 base points difference. it does not sound a lot but it is when you are talking about the big indexes out there. we have two spots that are moving things around
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dramatically first 3 m, 3 m at a good number. i am sorry, you don't go up 7% on a 1% raise guidance here. this looks like a short recovery and i know a lot of hedge funds are betting on -- another one with good volume and good pricing is caterpillar and raising your guidance of 25% that's a huge move up here again, four times normal volume. this looks like some people is covering shorts as we i saw this happening with a number of industrial happening last week. granger, another big company had a move up. huge volume on the day f its ea earnings and same with flemings. >> the other group i want to point out is the banks' ten
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years yielding the highest level since april right now. >> we are hitting new highs once again at all the major banks obvio usually a week or two, they're still recovering and going down to earnings. this is not happening this earning season these banks will go up immediately as we started reporting with companies like jp morgan the dow is near the highs of the day, 193 points. >> got it bob. >> what do you do with this record rally stay invested or sell out? >> warren financial is joining us now as well as corner stone financial partners good to have you here, gentle n gentlemen. >> thanks for having me. >> this is been going on for a long time and i am getting nervous this rally has been going on too long, should they stay or out? >> i think they should stay in this is a grass root rally this is based on earnings.
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if you watch what's happening in the morning when companies are reporting their easternings and what caterpillar and gm is doing. there is a lot of grass roots earning that's building up and sending the index is higher. maybe it is not for everyone but i think it is good to stay in. >> chris, what do you think at this point >> no, i agree, the markets have been doing well. it is all earnings based and it is the economic story that's happening around the world it is synchronized across the board. watch out for utilities as it is relatively expensive and they adopt have as good growth rates. something like the financial where prices a buck or one and a half of where you live >> randall, with all the senators meeting today with the
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president, on tax reform, what if we get that also? does that add to the rally or are we going to sell to the news >> no, i think it adds to the rallies. i don't think investors are expecting much out of washington, d.c. this is coming from the bottom chris is right to reference the rest of the world. for the first time in quite a few years, we are seeing growth in the rest of the world we are shifting some money away from the u.s. market into the international markets and emerging markets and trying to take advantage of that group not to take anything away from the united states though, we are doing well also. >> chris, i heard randy say if tax reform happens, it will add to the rally let me ask you if tax reform does not happen, if the tax massive cuts don't pass, what does it do to the rally if anything >> tax reform is a little bit
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priced and mostly not. >> i agree a lot with that statement and a lot of the rallies and earning basis are not counting tax cuts, if you do get tax cuts, small caps and mid caps are likely to rally higher. in this case, if you don't get tax reform at all, i do think the market is getting back a little bit and calling it a couple percent or a little bit more on the large cap base, we are looking at s&p 500 and a little bit of tax reform is baked in. >> just to explain, why do small caps benefit more than large caps on taxes. >> small caps traditionally pay and playing the traditional marginal tax rate. it is able to lower tax rates for corporations most small caps will get the drought from 35 % to 25% it is multi national and their tax rates are closer to 26%. >> got it guys, randy and chris.
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>> thank you >> all right, well, you know this, ge, general electric has been a difficult run for investors. performance have been down for more than a decade now >> in some debate forming about whether or not ge should be kicked out of index, it is the oldest component in it >> michael is joining us now to talk more about this it would seem impossible this is the oldest component in the dow. it is still a massive corporation. they follow on a difficult time. is there any real reason that ge should get the boot. >> i think it is mature to talk about that for a lot of reasons that you allude to yes, performance was your main stance for whether stocks staying in the dow almost $200 billion market value
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right now still, tremendous economic foot, we are talking about exposure of the global infrastructure and $125 billion in revenue, it is hard to replace ge with anything of significance scale, especially in the industrial places you will be going down, which by the way splitting in two and used to be a dow to find a comparable exposure. now, i do think there is something to be said for the idea that eventually if ge can use the high businesses and continue to shrink and lose its relevan relevance. to me, it is all about what will replace it and what's better and what's got out a little more of economic profile and nothing obvious. >> i was joking semi yesterday when we said we should replace gm with tesla and anything else with bit coin. there is dow 100,000 right there over night >> making the momentum -- look,
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what's interesting about this is what are the big stocks that maybe the dow committee's itching to get in there? is it amazon >> you are talking about like comcast is really big but its got the family control you have a give and take of what maybe next to give in. >> mike, stick around as we continue our conversation of the next guest who threw the towel on ge and seeing a dividend cut. christopher glenn is senior industrial analyst, what do you think here >> we are talking about what ge can continue or will continue as a member of the dow, thumbs up or down on that? >> well, i would evaluate the stock on that, i am not an expert of the components of the dow of what it should be in. like you guys said $100 billion market cap is a little premature on that decision discuss
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>> there they are, they're right there in boston around the corner from you where you are christopher. lets talk about the dividends, which is something you do analyze and many years one of the reasons people by ge, do you think it is safe? >> i think they'll cut it, the free cash flow is below the $8 billion current dividend pay out for the next couple of years at least it is a 4.4% yield that's an outliers they're having fun with a little incremental debt sale. >> some ge's shareholders maybe wishing they push ge out of the dow. >> what happens historically when a stock leeads the dow jones?
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>> it is a little intuitive. the reason for that, the people that makes the committee and who decides on what's in the dow are susceptible to a market sentiment. when it is at an ultimate low and at a time when it is sold out, lets look at one example in 2013, bank of america, and hewitt pakard and visas, as a group, the ones that's kicked out have done better >> christopher, what are you waiting to hear from mr. flannery, what do you want to hear that might turn your opinion on the stock a little bit more to the favorable side >> i would say two or three things one is clarification on the power segment between this year and next year, you will see a 30% profits decline. that's based on the pressure and
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no capacity in the industry and lower utilization in the world they did not see this rapid downtu downturn either. that's a bit concerning. loose comments on that is helpful. they indicated 20 billion of revenue would be up for the best we have some idea of what's likely in that respect the reallocation of that proceeds whether that's the pension plan or reduce debt. some of the low margin businesses, may not be a dime of earnings or they can reclaim that if it is allocated elegantly. chris, thank you so much christopher glynn, thanks. >> right now pushing a $4 trillion tax reform plan.
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the house has set a date for a new bill to be unveiled. >> nobody circles their calendar anymore, you got a reminder on our iphone >> that's right, i got an app or something. after this budget gets passed presumably on capitol hill you see the live shot there, you see he's in his policy lunch there with mitch mcconnell walking in, it was interrupted by protesters throwing russian flag at the president there and shouting trump is treason. tr trump is treason so lunchdid not get off to a good start. the president is there to pitch his tax reform proposal. he gave us a sense of what his argument would be. here is what the president said earlier today. we get this passed, which i
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believe we will. i would say $4 trillion back in the country. money that wants to come back in the united states cannot come back but under our plan, that money will flow back in. it will be quick and it will be very easy and it is a lot of money. >> so the president is making that pitch now behind closed doors. i can tell you the press pulled or gathered outside the room where the president is meeting with senate republicans saying there is some applause audible in the hallway for the president. we'll see when he comes out and he may talk to cameras there and give us a redialing through exactly how this went today and where they think things are going down the line. of course, all of this taking place in the mix of the president feuding of certain senators on capitol hill that adds to a political tenderness at the moment so a lot of tensions on this lunch
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rad right now. >> we'll carry it live, thanks so much. the transport have been on the chair since 2017 what's behind the rally? will the sector stay in an over drive. >> power lunch's exclusive interview with the ceo is next >> when it comes to the new iphone demand? and it is not just bit coin anymore? we'll talk to you about the new alternatives of encrypto currencies all that and more when "power lunch" comes back.
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. all right, time for more insights of the economy. mr. sanchez, thank you for joining us here on "power lunch. >> a lot of people don't know, you are not going to rent the truck and move across the country company used to be you are more top level economy from your advantavantange point does the economy reflects and if you can get one thing done to benefit your company, what will it be? >> brian, thank you for having me the good news of wa hat we are seeing in our commercial truck rental businesses. it is not jus renting trucks,
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individuals are moving across the country. >> that business have been soft the last couple of years we see it is beginning the pick up third kwaiquarter was a strong quarter for us in the truck business and it is encouraging for us it is a leading indicator of what's happening in the economy. there is more products moving and renting more trucks from us. there is one thing that we could get done inwashington today, i would be tax reform. i think tax reform not only would help our economy at ryder but more importantly would help with our commercial kpacustomer and we do business with 50,000 different companies and most of them privately owned and as those companies getting more confidence in economies and having more money to invest and they open up operations and leasing and renting more trucks
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and buying more logistics support from us. >> what would you do with the money and where would the money go there is a lot of criticisms of oh, these do not invest or hire more what would you do with the money? >> as we have more money and our customers have more money and need more trucks, we would invest that in more vehicles we own over 230,000 commercial trucks we own and maintain over a certain 30,000 commercial trucks as the economy picks up, we'll go on and buy more of them that create jobs as truck manufacture builds more trucks >> you are down in south florida, florida went through terrible hurricanes. how has the hurricanes have affected your business and what do you see in those affected areas in terms of economic activities >> during the hurricane, there was a bit of a slow down, the recovery effort after the
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hurricane certainly has created a need for more transportations and more of our services we expect that coming in our corners. we did see a pick up besides in addition to what we saw of the hurricanes the hurricanes have been an additional boost i would like to mention and i want to thank all of our truck drivers, there is 7,000 networks for riders and tens of thousands that sits behind the wheel of a ryder truck. they do a phenomenal job for us and all of us saw first hands of the hurricanes as all of the trucks roll in and we are bringing in water and food and necessary supplies to florida, texas and puerto rico. it is those truck drivers, 3.5 million professional truck drivers making it happen >> little lifelifesavers
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we keep on reading there is a big shortage of truck drivers. what do you have to pay truck drivers to get them to come on bor board. >> there is a surge of truck drivers. the pay for truck drivers vary dependsing on the type of routes it can be up to six figures depending on the types of routes those drivers are driving. >> all the analysts are talking about the eld, it is going into effect next year and they say it is going to change your company and the industry, what is that going to do to ryder's system. >> it forces all trucking companies to adhere to the law in terms of safety and the number of powers the driver can drive. it will level the plainfield for
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companies of which certainly adhering to the law. it is a good thing for the industry it will make it challenging for any small truck companies not adhering to the law. it will tighten up the market a little bit >> thanks so much for joining us, much appreciate it >> thank you for having me >> new reports out saying americans are reembracing a new type of loans. we'll tell you what it means for the real estate market and how it is boosting banks >> it could mean disaster for p publishers unless they pay up for facebook straight ahead on "power lunch." secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud.
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lets listen now to senate majority leader mitch mcconnell. >> i would highlight several things that i would think it is front and center going down at
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the end of this session. obviously, tax reform, we are hopeful of the house tomorrow pa passing the budget to begin the process of tax reform. we are going to be confirming a number of judges beginning with a couple of district judges that i found folks are on yesterday the president also talked about his upcoming announcement on op opioids. we have a national epidemic of proportion the administration seized on this issuand something tyler thornton for the american people we need to get our hands on this the best we can. the president will be talking about that later in the week >> all right, we'll go to break away from that as our audio was a little disrupted there as the gop leader in the senate mitch
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mcconnell gives us a play back of what was an interesting luncheon on capitol hill where the president was gathering with republican leaders we'll take a quick look and come back in just a moment. rodney and his new business.
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all right, we got the audio problem fixed. senator roy blunt is speaking right now. lets listen in >> the water of the u.s. would require the epa to be involved and so much of the economy these are huge over reaches setback on that. on taxes, the president says on his two principles observation, this is about tax cuts for working individuals and hardworking families and the other end of the spectrum is creating opportunities for companies to be mo more competitive now, very complicated if we stay with those two principles, we'll see economies grow and families who work hard for a living
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benefit from it and that's clearly where the president is and where the republicans and the senate are >> for 1.7 million jobs created in this country since last november that's what the president talked about. we witness great enthusiasm for tax relief for american families to make sure families are able to keep more dollars in their own pockets. >> 25% of people in our country don't have emergency access to $100 tax reform and the work that we are doing would give $4,000 in new average income to the average middle class family iesn this country we witness the shout out of the denver broncos >> in 1986, "top gun" was the number one movie at the top office
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1986 was mitch mcconnell was walking out like an egyptian >> we are still dealing with the 1986 tax code today. wi we can do better and put money in america's pocket and grow this economy [ inaudible [ inaudible question ] >> yeah, i don't have any observations about that. we are here trying to accomplish things for the american people we are all on the same page on the issues that i mentioned. we are trying to get the country growing again and that's what we are working on >> yeah. [ inaudible question ] >> did it scare you and did you guys talk about it and where there some concerns there?
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>> you guys are hollering so loud that i did not notice we did not kmecomment on it. >> the president and top republicans continue to have -- >> if there is anything, all republicans think enforcemeimpoo the country and our party is comprehensive tax reform the you shall itself brings about great immunity among our members. so we are concentrating on the agenda that we have for the american people, the president shares that agenda is going to do a good job, i think promoting that agenda and we attend to achieve what we set out to achieve before the end of the year >> what do you have as an obligation as a leader of this
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party to weigh on criticisms of the president. >> what i have an obligation to do is achieve the greatest cohesion that i can and trying to achieve for the american people of the agenda that we set out to achieve tax reform is what we are about. >> if there is anything that unifies the public is tax reforms. wi we have been looking to do this for years. we'll concentrate on what our agenda is and not any other distractions that you may be interested en. >> what's driving it >> the president's feud with bob corker and -- >> i am going to say the same thing. a lot of noise out there, we have a first amendment in this country, everybody gets to
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express themselves what we are concentrating on is the agenda of the american people's need. there is great cohesion of all persuasion to achieve this goal before the oechend of the year. >> thank you not a lot of clarity it was tough to hear a lot of the questions. once again the senator just came out after the lunch with the president being committed to get it done. >> more details will link out. i think somebody will talk >> yes, later. >> we'll give you a quick market check on a positive day for the dow. snoo >> it is rallying about 200 points right now >> higher, 200 points. s&p 500 up at 25.71. >> industrials and financials
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are your leaders today we talked a lot about tax reform we also talked a lot about apple. >> a little more release until the release of i phone 10. >> see this coming out of japan. >> the number one apple analyst on the street says things may not be as bad as they see. >> lets bring in our tony. thank you for joining us >> thank you for having me >> we found strong loyalty to apple overall. >> does it depend on what country they are in? >> we did find chinese consumers are more likely to buy the ten
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for incomes above $30,000, 50% of them said they were going to buy the 10 overall in china, it is about 26% that looked to be the attempt. >> why is that number not higher is it because the iphone 10 is to sif >> i think so. one is that consumers are not sure and they'll wait to see the device and place it alongside before ultimately deciding or being swayed >> we did find that there was some issues around price specifically in china, we had more than 50% of consumers say that the ten was very attractive and only at 26, they'll buy it it is a trip to the highball of.
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>> none others than steve -- >> he says i am not going to upgrade because i have the eight and the seven and it is all the same they're saying it is pretty much the same phone so what's the difference >> there is improve of photography and a faster process that exists as you progress in those situation. >> there is been incremental improvement. i would say between the sixth and the eight or six >> phones start to wear out, whether their screen cracked or getting devoted. >> if you are talking about battery diminishing. >> it leaves me directly to the
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question that i have, toni, a lot of people have been saying lately that their iphone is not performing the way they used to. >> they don't get the battery life out of it brian is knocking his head in agreement. my wife tells me this. did you hear these stories and it is merely a consequence dense. >> these older iphones begin to degrade with the new protect site >> i hear those issues and i live those issue he says smiling. >>. >> loit yum ioron -- >> it is like humans >> i don't have the same battery
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life >> have you identify what it is? >> i have an iphone 6, it is not a two-year-old phone i upgraded to the ios. >> my batterbatteries, i can wa go down. the new operating system is built for the new phone and a phone that's a faster process and usually cell phones have a battery life when you buy a phone, so there is a diminishing curve that is expected and i think when a phone becomes, you know, you upgrade it of ware and much like you upgrade your system. it is pretty much of the same. >> i am glad i am not crazy.
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>> oh reilly, we have the full story. >> this comes on the hills of the new york sometimes now it is -- not all that sfr s surprising i think many of us are surprised. and the agency maybe under some pressure >> and not toob in cal how much money is he going to make in the future >> it may not be as much and certainly representationally they made the offense by ticking a step back. >> what is his income straight now. >> is it books >> so it will be interesting to see what's next? >> podcast >> look at they are doing?
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>> going directly to consumers he does things like that >> good to you here. >> kripley farmly. coming up, we'll speak with a founder about theory and flat form or something detotally different. we'll learn a lot after this short break. not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way
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while their adoption is quick, it comes with criticism with the likes of jerry dimon. >> we have our exclusive now ba brian kelly who does refer to himself as a third person. >> yes, sullivan does not do that >> thank you very much for joining us >> this is a tough topic for all people if i ask you a quote, ""old man" question, i apologize. >> give us the 10 seconds or 20
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secon seconds lament terms of what it is >> the bit coin created two things >> one was the application and the other thing was the under lining technology. >> in 2012 i and many others decided that we should put more applications on this trust worthy, shareable collaboration database >> what i understand, you are a platform and you are not currency you can do transportation and making smart contracts that execute automatically. why do you have a price? why is there a per share price >> what's the value associated with >> for the same reason oil as a price. >> oil is a fuel that powers the global platform.
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the ether token used to pay for steps and store jobs on the platform that's out there. >> yeah, we'll hear a lot about those coming up. >> so joe, i think me, sometimes it helps if you talk about what is being belt on top of it >> talk to me about some of the cool stuff that you are building out of consensus >> what does that mean, guys >> i am sorry, my brain is smoking right now. give us a real world explanation. >> things like forest carbon and bio diversity of water you can put them on a platform
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that makes them tradeable. >> it makes supply chain tangibles so they can be service trade in and calculated into the distinguish -- >> you have a finance business and i am your client. >> right >> hlets pretend we are two oil companies. >> i am bigger than you. >> obviously >> at the end of the year, we have a covering footprint. >> with this particular project, it is called - now, i can price our oil trade between you and me in these carbon credits and i call it a new ral oil train. it is all in one pact and making
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it easier for other companies to do it and it is better, faster and cheaper. >> government wants to know how money, words so they can take their share. >> is that a reportable transportation are we pulling it off the grid >> no, krypto is much more affordable >> exactly >> again, it is important for the audience to understand the difference between bit coin and block chain. >> i hate these terms currency or assets. we can get in the debate all day long wu are you are a platform >> so is there anything analogous out there that's
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online or our febest or audience can refer to >> people will continue to use the worldwide web, it is just billing versions of applications will enable us to do things in a more trustworthy way and it enables use cases that aren't enabled -- >> so are you the tim berners-lee of blockchain? >> i'm not a guy named vitallic buterin might be >> he's like 23. >> would it be all right to call it almost like the apple app store in a sense where people go on there, build an app on top of your platform and then the world can use it is it a good analogy >> except it's not a walt garden it's like the world wide web anyone can permissionlessly upload an application and people can use tiny slices of this ether token to pay for the use of those applications.
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>> joe lubin, we really appreciate you coming in co-founder of ethereum we learned a lot hopefully our audience will. we'll see you again. >> i hope so >> i even understood that last sentence he said thanks, brian. ge may be down again today, but these giants of the dow, take a look at them, they are picking up the sckla we're going to ask two top traders how to trade this rally. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. aggressive styling, so you can break away from everyone else.
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welcome back to "power lunch. i'm john harwood in washington more fallout from the intra-republican civil war jeff flake of arizona, one of the senators up for re-election in 2018, has announced he's not seeking re-election. now, jeff flake had been targeted by steve bannon, the president's ally he'd been criticized strongly by president trump. unclear who will step up to try to run he was facing a primary challenge. this actually could lure more promising alternatives into that field. so it could end up helping republicans hold this seat but we will see how that proceeds but as the president feuds with bob corker of tennessee, one of corker's colleagues says he's had enough brian? >> wow jeff flake of arizona won't seek -- things just getting more and more interesting for 2018 and 2020
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john harwood, thank you very much all right. it is time for trading nation. today let's take a look at three dow stocks surging on the back of earnings. caterpillar, 3m and mcdonald's all rallying in today's session. cat and 3m hitting all-time highs but what's new david seaberg of cowan and company joining us as well as mike binger with gradient investments. david, i joked at the top of the show that i'm out of hyperbole, man, and one thing i can do is talk i've run out of sort of any sort of thing to say about the stock market are you still a buyer of some of these dow names which are up 30%, 40% this year >> yeah, the three you mentioned, the momentum for the triple m, for cat track, it's there. it feels like it wants to keep going. of the three i think i prefer mcdonald's their outperformance from a comp perspective as far as the average fast casual name is just the basis points of outperformance the gap has just widened again. they're executing in my opinion on really all cylinders here i think the only concerning thing that came from the call is
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the spend in 2018 and sort of what that's going tone tail. that is the only question that came up. i look at it and say outside of that they're executing on all cylinders and this is a name you want to continue to own. i'd stick with mcdonald's. >> sticking with mcdonald's. mike, any of those names still look interesting and attractive to you from a valuation perspective? would you buy any of them now? >> i certainly wouldn't buy 3m i think it's way too expensive for kind of mid single-digit to high single-digit growth caterpillar i may buy. i think caterpillar, the earnings just keep going up and i don't know where that goes it's a margin story. earnings this year went from the 5s to the $6 next year it could be $8, $9, and that stock is working right now. i would buy that but mcdonald's, interestingly enough, we sold yesterday and we bought conagra >> sold mcdonald's thank you, guys. have a quick rap her for more trading nation go to tradingnation.cnbc.com
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stock of the day is caterpillar up 48% for the year. but let's go back and look at a five-year chart of caterpillar if we might. it was not always the stock of the day, and it just goes to show you that laggards can become leaders in a hurry. >> thanks so much for watching "power lunch." "closing bell" starts right now. welcome to "the closing bell." i'm sara eisen for kelly evans at the new york stock exchange >> and i'm bill griffeth here we go again another big rally on wall street the dow on track for a record close after strong earnings from industrial giants 3m and caterpillar. a few others are doing well as well today but those two stocks are responsible for the majority of today's rally for the dow. in fact, we were up almost 200 points a short time ago. we're off those highs right now. >> investors getting set for another batch of potential market-moving earnings after the

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